Airbus crisis could affect Finnair's investment plans

New wide-body A350 development could be derailed by problems with giant A380

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The crisis affecting the European airliner manufacturer Airbus could threaten even the Finnish national carrier Finnair's investment plans. The company has entrusted the future development of their entire long-haul traffic to Airbus's A350 XWB (Extra Wide Body) which is still in the design stage, and at worst might never get off the drawing-board.
      In an interview with the British newspaper Financial Times, Thomas Enders, the Co-Chief Executive of the European Aeronautic Defence and Space Company EADS, which is the parent company of Airbus, reported that the problems EADS is having can risk the entire A350 project. "I cannot rule out that possibility", said Enders.
      Finnair has placed an order with Airbus for nine A350 aircraft. Initially the order was placed for the original version of the plane, which turned out to be a failure, whereupon Airbus announced that the original concept would be changed. The improved version is called A350 XWB (Extra Wide Body).
     
The modification caused a delay in the delivery schedule of the A350 aircraft, and consequently, the first A350s are to be delivered to Finnair as late as in 2012.
      So far, the carrier has not been particularly worried. According to the comparison made by Finnair, Airbus offered a Mercedes at the price of a Lada - even though the proposed delivery schedule was a bit late. That offer was easy to accept.
     
However, perhaps the time for concern is approaching. After all, Enders commented to the Financial Times that the entire future of the group would be at risk if the development of the A350 led to similar problems to those experienced with the giant A380.
      The EADS Board is to make a decision on the fate of the A350 within the next few weeks. That decision will inevitably be a difficult one. The development of the A350 based on the present concept would cost some EUR eight billion, while EADS is mired in a severe financial crisis following the delays on the A380 as well as the weakening US dollar.
      Traditionally, the product development of Airbus has been subsidised by the governments of the Franco-German group's home countries with an amount of one-third of its total costs. However, in the future these subsidies might be regarded as illegal, as the USA has filed a complaint about the issue with the World Trade Organization.


Previously in HS International Edition:
  New Finnair CEO Jukka Hienonen gets his wings (3.1.2006)
  Finnair to update long-haul fleet with 12 new Airbus jets (8.12.2005)

Links:
  EADS press release: Airbus Confirms Further A380 Delay (3.10.2006)
  Airbus: A350 Xtra Wide Body
  Finnair

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